Why All The Hype Around Cryptocurrency?
Over the last couple years, investing in cryptocurrencies has become very popular. What’s all the hype about – and is now a good time to get involved? This post explains it all.
Contents
What is cryptocurrency?
Cryptocurrencies are digital currencies. Bitcoin is the most famous example and was the first cryptocurrency to be invented. It was created as a neutral currency that people from multiple countries could trade. Until the invention of Bitcoin, all currencies were government created.
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Other cryptocurrencies have since been developed. These include popular ones such as Ethereum and Litecoin. In fact, as of 2021, there are about 4000 cryptocurrencies in circulation.
Why are people buying crypto?
You can buy Bitcoin and other cryptocurrencies using an online cryptocurrency exchange. These are available as sites, such as Independent Reserve for those in Australia, New Zealand and Singapore, plus apps to make buying and trading crypto on-the-go as simple as possible.
Over time, Bitcoin and other cryptocurrencies have become less of a source of hard currency and more of a source of investment. This is due to Bitcoin’s huge rise in value – 1 Bitcoin equalled 1 US dollar back in 2011 and now 1 Bitcoin is equivalent to over 47,000 US dollars.
Bitcoin has been the most successful, however, other cryptocurrencies have also seen huge jumps in value too. Many people have decided to invest as a ‘get rich quick scheme’. Others have tried it as a gamble. For many, it has paid off.
Is it too late to get involved?
The best way to make an investment decision is to educate yourself. Read articles and online sources for information, including the Reddit best cryptocurrency exchange review, to gain a better idea of what to invest in. The link explains the best cryptocurrency exchanges in Australia, and explains how to choose a cryptocurrency investment.
Many of the major cryptocurrencies are currently falling in value. Some are calling it the ‘crypto crash’. However, this is not the first time this has happened.
Bitcoin crashed in 2018 and recovered. The same will likely happen again. Therefore, it is not too late to invest in crypto – although you may want to tread carefully at the moment.
Where can I buy crypto?
You can buy Bitcoin and other cryptocurrencies using an online cryptocurrency exchange. These are available as sites and as apps.
It’s worth comparing Bitcoin trading fees to save money when trading cryptocurrencies. If you choose to buy a lot of crypto, you should secure it in a digital wallet so that it’s safe from hackers.
Never buy cryptocurrency outside of a regulated platform. This will ensure that you are not scammed out of money.
How can I reduce the risks when investing in crypto?
Cryptocurrencies can be a risky investment. Given that they’re still a relatively new investment instrument, people are still working out what triggers them to rise and fall. Educating yourself could be worthwhile before getting involved – especially if you’re investing a lot of money into crypto.
As with stocks or forex, it’s important to diversify your portfolio. Don’t invest all your money into cryptocurrency – if this falls, you’ve lost everything. By spreading your investment across multiple cryptocurrencies, there’s less risk of losing it all.
When buying crypto, always use a trusted exchange. This will stop you getting ripped off or having glitches ruin your investment. It’s worth reading reviews of exchanges and getting recommendations from people that are already involved.
There are plenty of guides online on how to invest in cryptocurrency that could offer you handy tips.
Consult with a financial advisor regarding these important issues.
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Good luck!
Ken Boyd
Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies
(email) ken@stltest.net
(website and blog) https://www.accountingaccidentally.com/